Flight Centre to close 90 stores

Flight Centre will axe 90 of its Australian stores as the travel behemoth warns the industry will not recover from impacts of the coronavirus for years.

Flight Centre says the travel industry will not recover from the impacts of the coronavirus for at least the next three years. Picture: NCA NewsWire / Andrew Henshaw

Flight Centre will axe 90 of its Australian stores as the travel behemoth warns the industry will not recover from impacts of the coronavirus for at least the next three years.

The Queensland-based holiday company confirmed about 20 per cent of its store network will be closed with ongoing international and domestic border restrictions stifling the aviation and travel industry.

Releasing its annual report on Thursday, the 40-year-plus global travel business said 70 per cent of its 20,000-strong global workforce had either been stood down or made redundant since the onset of the health crisis.

The aviation and travel industry has been one of the hardest hit from COVID-19, with airport passenger numbers across major Australian airports down 95 per cent due to the halt on movement.

Flight Centre at its 2020 financial year results posted an eye-watering $849 million loss due to the global shutdown, prompting its managing director Graham Turner to say the COVID-19 pandemic had been the most challenging event the 40-year-plus travel company had faced.

Mr Turner said uncertainty around the end of government-imposed travel restrictions was impacting the company’s ability to gauge a return to normal operating conditions.

Flight Centre general manager and CEO Graham Turner says it will take years for the travel industry to recover from the coronavirus pandemic. Picture: Annette Dew

“Flight Centre believes demand for international travel, which is the leisure business’s primary revenue source, will not fully recover before FY23 or FY24 in the absence of an effective vaccine,” Mr Turner stated in the group’s annual report.

Flight Centre said it expected to see gradual sales growth once travel bubbles and aviation corridors were established between countries.

Within its leisure business, approximately $600 million has been returned to customers who paid for holiday packages that were cancelled due to travel closures.

Flight Centres forecasts it will receive $70 million to $80 million from JobKeeper payments that are supporting its Australian-based workforce.

The company is also expecting its corporate business will likely return to a profit ahead of leisure operations, as it is more weighted to domestic and regional travel.

“Heavier domestic weighting, coupled with lower cost base and strong pipeline of account wins, is likely to lead to the corporate business returning to profit ahead of the leisure business,” Mr Turner said.